Tech News : Google Breakup Proposed

Following a recent US ruling that Google acted illegally to maintain a monopoly on its online search and the associated advertising, the US government has now proposed forcing Google to sell off parts of its business, potentially leading to the breakup of one of the world’s leading tech companies.

Antitrust Remedies – Structural Relief Suggested 

After years of investigation and following the outcome in August of a ten-week trial, a US judge delivered the landmark ruling that, “Google is a monopolist, and it has acted as one to maintain its monopoly.”  At the time, ‘structural’ remedies, i.e. ‘structural relief’ (altering the structure of a company to restore competitive conditions in a market) was one of the remedies suggested to curb Google’s anticompetitive practices (if other remedies weren’t adequate). In plain English, structural relief essentially means breaking up a company.

Sell Off Chrome Browser and Android OS? 

Following this ruling, The US Department of Justice (DoJ) and a coalition of state attorneys general have recently submitted a 32-page filing (PDF) document outlining suggested remedies to address Google’s monopolies in search and search advertising. The proposal suggests that Google could be forced to sell off key assets such as its Chrome browser and Android operating system, which the DoJ argues are used to maintain its illegal dominance.

Four Areas 

In fact, the DoJ has proposed four areas for potential remedies, which are:

1. Search distribution. The DoJ wants to limit or prohibit Google’s exclusive deals that set its search engine as the default on devices like iPhones and Android smartphones. This would reduce Google’s control over how users access search services and open the market for competition.

2. Data access and usage. This remedy would require Google to share its search data, such as search queries and results, with competitors. The goal is to prevent Google from having an unfair advantage through exclusive access to user data that can be used to improve its services. There are concerns about privacy and security risks, which Google has highlighted as a potential issue.

3. Extending search monopoly. With this issue, the DoJ is concerned that Google could use its dominance in search to extend its control to new areas, such as artificial intelligence. This proposal may prevent Google from using search data to train its AI models unless competitors have access to similar data.

4. Advertising practices. The DoJ is also targetting Google’s monopoly in digital advertising. It proposes increasing competition by forcing Google to license or syndicate its advertising platforms to other companies. This could involve changes to how Google auctions ad space, aiming to level the playing field for advertisers.

What Has Google Said In Response? 

Googles’ Lee-Anne Mulholland, Vice President, Regulatory Affairs has issued a written response online which she essentially argues that Google believes the DoJ’s proposals (which she says are “radical and sweeping”) go beyond the legal issues at hand and could have far-reaching, unintended consequences for consumers, businesses, and American technological leadership. For example, Mulholland made the following points in Google’s defence:

– In terms of privacy and security risks, Google argues that forcing it to share sensitive search data, such as queries and results, with competitors would create significant privacy and security risks. These concerns stem from the potential for bad actors to access personal data in less secure environments. Google emphasises that current strict security standards protect user data, and sharing this information with other companies could compromise this.

– In relation to the impact on AI innovation, Google is concerned that restrictions on its use of search data for training AI models would hinder American innovation. The company highlights the competitive nature of the global AI industry and argues that government intervention could skew investment and slow down the development of new technologies at a critical moment.

– On the key issue of divesting Chrome and Android, it’s not surprising that Google opposes the idea of separating Chrome and Android from its business, claiming that this would disrupt the products and their open-source nature. The company argues that Chrome and Android benefit users through security features and by keeping costs low. Splitting them off, according to Google, would make them more expensive to maintain, jeopardise security updates, and hurt competition with Apple’s ecosystem

– In relation to disruption to advertising, Google believes that changes to its advertising system would hurt small businesses and publishers that rely on its platform. It argues that its current system helps level the playing field for advertisers of all sizes and that mandated changes could reduce the value of online ads for everyone involved.

– Addressing concerns about overreach and consumer harm, Google criticises the DoJ’s proposed restrictions on search distribution contracts, arguing that these would create unnecessary friction for users trying to access information and would reduce revenue for companies like Mozilla and Android device manufacturers, potentially raising costs for consumers.

Appeal 

The DoJ’s filing is just a proposed framework of potential remedies, with a more detailed filing being due in November 2024. Google has stated that it plans to appeal the ruling in the DoJ’s antitrust case over its search monopoly. However, the exact date for Google’s appeal has not yet been set, although Google is expected to respond to the U.S. Department of Justice’s proposals by December 2024. The legal appeal process could take years before a final resolution is reached.

What Would Happen If Google Was Broken Up? 

If Google is eventually forced to sell off major parts of its business, like Android and Chrome, it would significantly impact both the company and the broader market. For example, some of the key impacts would be:

– To Google’s business. Losing Android and Chrome would dismantle Google’s integration across mobile and web platforms. Android, key to mobile search and app distribution, could fragment without Google’s resources, potentially increasing device costs and slowing updates. Chrome, which dominates the browser market, would also be less efficient without Google’s web service integration.

– The market impact. A breakup would create opportunities for competitors like Apple and Microsoft to gain market share. It would reduce anti-competitive barriers in mobile operating systems and browsers, enabling smaller players to thrive.

– Consumer and security concerns. Consumers might face fragmented services and reduced security, as Google’s current seamless integration between products could be disrupted. Google also argues that splitting off Android and Chrome could hinder innovation and security across platforms.

Didn’t Work Before With Microsoft

It should be noted here, however, that the DoJ’s attempt to break up Microsoft in 2000 failed, which showed how complex and uncertain efforts to dismantle tech giants can be. Also, subsequent attempts to limit Microsoft’s dominance, like the ineffective browser ballot in 2007, have highlighted the difficulty of regulating major companies, and Google may face similar challenges.

What About Search Evolution? 

Currently, the search market is evolving, with disruptions from AI and social media. While it may be true that Google still dominates, new technologies, such as large language models (LLMs), could weaken its hold, much like how Microsoft lost ground to Google Chrome in the browser wars. Google has, indeed, acknowledged that competition in search is growing, especially with AI transforming the landscape. This evolving market might naturally reduce Google’s dominance, potentially making a breakup less impactful over the long term.

What Does This Mean For Your Business? 

As the battle between Google and the DoJ continues, the question of whether the proposed breakup will actually happen remains uncertain. The complexities of dismantling a tech giant like Google are vast, as evidenced by previous attempts to regulate similar companies like Microsoft. While the DoJ is pushing hard for structural remedies, Google’s appeal and the lengthy legal process could stall any significant changes for years. Even if the breakup does occur, the impact might not be as transformative as expected, with AI and new technologies already shaking up the search market.

For Google, losing key assets like Android and Chrome would significantly weaken its control over the mobile and web ecosystems, making it harder to maintain the same level of integration and innovation. Competitors like Apple and Microsoft would undoubtedly benefit from the opening, gaining ground in both mobile and browser markets. However, consumers might face higher costs and fragmented services, especially if the separation affects Android’s open-source model or Chrome’s security features.

This shift could also create challenges for businesses that rely heavily on Google’s services. Many small and medium-sized enterprises depend on Google’s ad platform and tools like Google Analytics for visibility and revenue. A forced breakup could disrupt these services, raising costs or making the platforms less efficient. Similarly, businesses that develop apps for Android could face increased complexity if Android were to be handled by a different company, with potential delays in software updates and security patches affecting their operations.

At the same time, the evolving nature of search itself could change the landscape faster than any regulatory intervention. AI-driven platforms and social media are already challenging Google’s dominance, potentially rendering a breakup less impactful in the long term. Google has acknowledged that competition is intensifying, and the market could naturally shift away from its control as new technologies develop.

Ultimately, the road ahead is uncertain, and the final outcome of this antitrust case will set a precedent for future tech regulation. Whether through legal action or technological disruption, Google’s position at the top may not be as secure as it once was. The next few years will be pivotal in determining how the search market, and the broader tech industry, will evolve and how businesses that rely on Google’s ecosystem will adapt to this change.